All’s Quiet In Pitru Paksha - Sumangalam

Sept. 27, 2010 - PRLog -- This is certainly not a good time to indulge in real estate. And if you believe realty pundits, don’t expect sales to pick even during Diwali. The Pitru Paksha notwithstanding, which is considered inauspicious by Hindu traditions, even the Commonwealth Games are playing spoilsport and adding to the developers’ woes. “The only people laughing their way to the bank are the travel agents as most of Delhi is on a planned holiday during this period,” says a Noida-based broker. “We work all seven days of the week and this is good time for us to be with our families,” he says.

But will sales peak during Diwali? Though developers definitely hope for improved sales, real estate analysts are not biting. “It’s a wrong notion among people that home sales peak during Diwali,” says the broker. “I have been around for several years and studied the market well to realise that Diwali time is spent gifting and meeting people. It’s always after the festival that sales start picking up.”



Another broker says that though Diwali helps in increasing sales by up to 20% and he expects the same this time too, “But property prices are already high. I wonder if buyers will go in for purchases even during the festive season.” Moreover, the nascent economic revival might not be enough to boost purchasing sentiments, even with the onset of the festival season. “While this time is likely to bring a certain degree of temporary effervescence in residential sales, one cannot read too much into this in market terms,” says Ashutosh Limaye, Associate Director, Strategic Consulting, Jones Lang LaSelle, a real-estate services firm. “We are certainly seeing a significant return of interest in home buying this year, but a sustainable revival depends on a number of macro factors.”



Though property buying ranks somewhere on top of every Indian’s must-do dream list, it’s rarely bought on impulse and it cannot be compared to buying a television, stereo, mobile or even a car. “The prospective buyer first shortlists and selects a house according to his choice; puts it on hold with the developer and finalises the deal on such festive occasions which are considered auspicious moments for property and other capital purchases,” says another broker.

Talk to high-profile investors and they tell you homebuyers are a lot more circumspect this year. “In primary cities like Noida, there’s a marked degree of fence-sitting in anticipation of a correction. People are already talking about another real estate bubble round the corner,” says a Delhi-based investor with huge interests in Noida real estate.

He says the demand for right-priced homes in affordable locations remains steady, but there is also a noticeable slowdown in demand for overpriced areas and projects. “Sampoornam from Eros in Noida Extension is the latest example, while Aamantran II, or Magnolia Park as Eldeco prefers to call it, in Sector 119 is getting subdued response.”

Most developers are not even releasing new ads during this fortnight, though there are a sensible few, who are using this period for branding, or warming up exercise for the festive season ahead. “Seasoned players like Eldeco and Mahagun took the leap of faith with one-off ads launching their new projects, but even they have realised the market’s totally dull,” says another broker.

He says they should take a lesson from Eros who played its cards so well by launching its much-hyped project Sampoornam well in time before the shradh-paksha. “They are already claiming Phase-I sellout and during Navratras, they’ll be out with Phase-II bookings,” he says.

So will this festive season bring about some cheer for the residential real-estate segment? Or will developers have no other option but to pray that the customers come in, considering the astronomical prices of properties across India and tighter lending norms from financial institutions?

Brokers say that more than festival freebies, market-savvy customers now focus on location, pricing and appreciation potential of a property. “Add-on incentives are welcome but if the property doesn’t meet these three yardsticks, people are not interested,” says a real estate consultant.

Agrees Limaye, who says, “Festival-oriented promotional activity will happen as always, but unrelated freebies will be at a minimum. Given the market dynamics now, I would say that there will be a greater emphasis on friendlier financial structuring and actual rate discounts instead.”

Though analysts don't expect much leverage from developers, financial institutions such as Allahabad Bank are offering borrowers an interest concession of up to 1% on home loans during the festival period. But then we know that Allahabad Bank is not a big player in the home-loan market. On the other hand, big lenders (both in the public and private sectors) such as State Bank of India (SBI) and ICICI Bank have hiked lending rates.

Source: www.topfloor.in

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